China’s Postal Savings Bank Said to Win $8 Billion IPO Approval

  • Lender moves closer to world’s biggest share sale this year
  • Postal Savings Bank has more outlets than any listed lender

Postal Savings Bank of China Co., moving closer to the world’s biggest share sale this year, won Hong Kong stock exchange approval for an initial public offering that could raise about $8 billion, people with knowledge of the matter said.

QuickTake Postal Banking

The Beijing-based bank plans to start gauging investor demand for the offering in the first half of September, according to the people, who asked not to be identified because the information is private.

Postal Savings Bank, ubiquitous in small-town China, joins Bank of Tianjin Co. and China Zheshang Bank Co. in selling shares in Hong Kong to fund expansion. It reported an 11 percent increase in first-quarter profit as it pared provisions for bad loans, according to pre-listing documents filed with the exchange.

IFR reported the approval earlier, citing unidentified people. A Hong Kong-based external spokeswoman for Postal Savings Bank declined to comment.

Shadow Banking

The lender, which has more outlets than any listed lender, has also plunged into shadow-banking arrangements that could make investors question its reputation as sleepy and safe. Postal Savings Bank’s pre-listing documents disclosed 953 billion yuan ($144 billion) of interbank investments in “special purpose vehicles,” which can include holdings of wealth management products, trust investment plans, asset management plans and securities investment funds. The holdings are up more than 500 percent since 2013. 

Chinese financial companies that listed in the city this year have gained an average 2.2 percent from their offer prices when adjusted for deal size, according to data compiled by Bloomberg. Hong Kong first-time share sales have raised $9.7 billion in 2016, down from $20.1 billion for the same period last year, the data show.

Bank of America Corp., China International Capital Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are joint sponsors of the offering, according to the pre-listing documents. An $8 billion IPO would be the largest since e-commerce billionaire Jack Ma’s Alibaba Group Holding Ltd. priced its $25 billion New York share sale in September 2014.